Apple Hospitality’s Actions to Mitigate Impact of COVID-19
The following is a brief summary of certain measures the Company has taken to help maintain a sound liquidity position as a result of the COVID-19 situation and associated economic impact. With the support of its brands and third-party management companies, the Company will continue to evaluate and implement additional measures as the situation evolves.
- Currently all of Apple Hospitality’s hotels remain open and operational. Each of the Company’s brands and third-party management companies has implemented cost elimination and efficiency initiatives at each of the Company’s hotels by reducing labor costs and tempering certain services and amenities. The impact of the situation will vary by market, and the Company is formulating contingency plans in the event it is required to temporarily close individual hotels in response to government mandates or other local factors.
- The Company has postponed all non-essential capital improvement projects planned for 2020 and anticipates a reduction of approximately $50 million in the previously announced capital improvements program for the year.
- The Company has suspended its monthly distributions, effective immediately. The Company’s Board of Directors, in consultation with management, will continue to monitor hotel operations and intends to resume monthly distributions at a time and level determined to be prudent in relation to the Company’s other cash requirements.
- As a precautionary measure, to increase the amount of cash on hand, the Company has recently drawn on its credit facility and currently has approximately $300 million of cash on hand. Current availability on the Company’s revolving credit facility is $145 million. The Company has no scheduled debt maturities for the remainder of the year and approximately $34 million in scheduled maturities in 2021.
- Glade Knight, the Company’s Founder and Executive Chairman, has volunteered to forego his salary for the next six months, effective immediately. In addition, Justin Knight, the Company’s President and Chief Executive Officer, has volunteered to reduce his target compensation by 60 percent, and the non-employee directors of the Company’s Board of Directors, as a group, have volunteered to reduce their annual fee by more than 15 percent. The Company’s senior management team owns approximately 7 percent of the Company’s outstanding common stock.
“These additional measures are designed to further enhance our liquidity position and help safeguard long-term value for our shareholders,” said Justin Knight, President and Chief Executive Officer of Apple Hospitality. “We are diligently working with the brands and our management companies to effectively adapt our business to mitigate the financial impact of the COVID-19 situation and the abrupt changes in demand it is causing. The COVID-19 outbreak and efforts to mitigate it have dramatically impacted the environment in which we operate, and our efforts to maintain our business and preserve our ability to thrive in future years require us to make difficult decisions that affect our employees, our shareholders and the associates at our hotels. We do not take these decisions lightly. While we do not yet know how long the current situation will last, we will work to reinstate normal operations at our hotels and appropriate distributions to our shareholders as the environment improves. Apple Hospitality was intentionally structured to weather challenging times and produce attractive returns during periods of economic prosperity. We remain confident in the strength of our hospitality platform and the experience and ability of our team to successfully manage these unprecedented times.”
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